What is intellectual property and what should NHS organisations do to protect their financial interests? Claire Reynolds explains the finer points

Intellectual property is non-tangible property that results from creative activity. It can take the form of discoveries, techniques, processes, formulae, inventions or specifications. It could also include know-how, design rights, copyright, trademarks, patents or trade secrets.

In the NHS, intellectual property could arise through work such as research and development or in the delivery or management of patient care. Examples could include a new kind of blanket that helps to move patients, new products to treat dental caries, a questionnaire measuring clinical outcomes from psychological therapies or equipment that determines whether capillary blood flow is still present in severely burnt skin.

Intellectual property has a commercial value because its owner has exclusive rights to use an invention or to carry out certain processes. The owner can - for a fee - allow others to use the invention or process. If intellectual property rights are not adequately protected, then ownership may be disputed and/or the value of the property could be exploited by others.

Ownership questions

So how can NHS organisations protect their intellectual property rights?

Deciding who owns intellectual property can be difficult, and employees often think they have intellectual property rights when they do not.

Legally, the employer is the owner of intellectual property generated by the employee in the course of his/her employment or normal duties. However, an employee may argue that intellectual property has been created outside normal duties or even that an employment contract provides that he or she has intellectual property rights. Remember that an employment contract does not have to be in writing and that even if it is, there can also be extra, verbally agreed clauses.

If it is difficult to decide whether an employer or employee owns intellectual property rights, the position is even more complicated in other situations. What about employees who hold joint appointments - for example, in the NHS and a university or commercial organisation or charity? Employees can be seconded out to other organisations. And what about people who are not employees - a trust may host someone for training purposes or accept a secondee. Who owns any intellectual property generated by trainees and secondees?

Clear contracts

All these difficulties can be avoided by putting in place a written agreement that clearly sets out who owns the rights to any intellectual property that is generated. For employees, the agreement can be set out in the employment contract. For others, a separate agreement is needed.

Having a written agreement about ownership is not the end of the story. The NHS wants to encourage innovation. One way to do this is to financially reward those who develop intellectual property that is successfully used to produce income. Royalties are often split between the creator(s), the NHS body and a private company brought in to exploit the intellectual property. So, written agreements about intellectual property need very careful drafting to deal with ownership and how any income generated by the intellectual property is to be divided up.

Who is responsible for protecting the NHS's intellectual property? It is not just directors of research and development. Directors of finance, clinical operations and human resources all have particular responsibilities for managing intellectual property generated by NHS employees and for generating income from it.

There is plenty of Department of Health guidance and professional specialist advice on the range of intellectual property issues, including management arrangements, spin-out companies, licence agreements and employment matters. So, there is no excuse - trusts need to encourage innovation and exploit and protect valuable intellectual property. Today's bright idea can be tomorrow's cash cow - especially welcome in the current challenging financial situation.